Not to be undone in a week filled with supply chain technology news, SAP announced this afternoon that its SAP America, Inc. subsidiary has entered into an agreement to acquire Ariba for an estimated value of $4.5 billion, or $45 per share.  The transaction represents a 20 percent premium over Ariba’s closing stock price yesterday. Ariba’s board of directors has already approved the this deal and the transaction is expected to close in the third quarter of calendar year 2012, subject to Ariba stockholder approval, clearances by relevant regulatory authorities and other customary closing conditions. According to SAP, the transaction is expected to be accretive to SAP’s non-IFRS earnings per share in 2013.

The announcement itself will provide some shock to the procurement technology market, especially on the heels of IBM’s December acquisition of principal Ariba competitor Emptoris.  The interesting aspect at the closing of the transaction is the likes of SAP, IBM and Oracle competing in the area of sourcing, procurement technology and supplier networks.

With the addition of Ariba, there will be considerable overlap among existing SAP procurement and SRM functionality which will have to rationalized for customers in addition to value-added procurement technology and services provided by SAP SRM partner’s, Hubwoo and Crossgate. In our Supply Chain Matters commentary related to SAP’s recent Sapphire conference, we noted bold vision but confusing messaging and execution.  The Ariba acquisition, at face value, obviously adds to those internal challenges, not to mention that some Ariba customers are also SAP customers who passed on SAP SRM.

Stay tuned for further Supply Chain Matters commentary and insights as more definitive information becomes available.

A final thought relates to Oracle, who may have to consider beefing-up its procurement capabilities for customers in the light of these two significant moves from both IBM, and now SAP.   One wonders if Oracle was also involved in Ariba’s courting dance.

Bob Ferrari